Pound rallies on reports of Brexit financial services deal
Thursday 1 November 2018
With month-end US$ demand largely out the way we've seen some solid selling since and GBPUSD has led the way after a report in The Times suggested a Brexit deal on financial services had been made and will be confirmed within 3 weeks. UK Brexit minister Raab had hinted at it earlier which gave the Pound a sharp lift only to fall back as No.10 poured cold water on the idea. Funny ol' game politics and deal making eh? Oh,and we have the latest BOE decision to throw in the mix today too.
GBPUSD easily held the support line at 1.2700 I mentioned yesterday, then 1.2730 but failed to break above 1.2780 until the Raab comments where we tested the next decent line t 1.2830 only to fall straight back to 1.2760. We didn't go any lower though and we were starting to drift higher again when the Times story broke then saw 1.2830 being tested again.
Once broken we didn't come back and overnight/this morning we've seen further moves up to 1.2920 where sellers have prevailed so far. Sellers still poised at 1.2920 then 1.2950, 1.2975-80 and larger into 1.3000.Immediate demand between 1.2880-1.2900 with larger support into 1.2850 then the now pivotal 1.2830 area. More at 1.2800 and 1.2780.I've not sold again since 1.2830 broke but I remain a GBP bear and rally seller for the moment while respecting any positive Brexit news of course. The financial services sector accounts for around 80% of UK GDP so the story understandably gives hope but what we don't know yet is how far the rest of the agreement is progressing and the level of its GBP-positive tones. Both sides have frequently said nothing is agreed until everything is agreedMarkets not expecting much from the BOE today in terms of rate or voting change but we'll stand poised for the unexpected as always.
I mentioned yesterday that I had sold my EURGBP longs having expected most of the month-end demand being completed which was a relief seeing as we've since tumbled to 0.8805 (GBPEUR up to 1.1358) but some decent demand down there holding for the moment with more behind that into 0.8780. Sellers now poised into 0.8860, 0.8880, 0.8900 then 0.8920 still.
EURUSD has tested the strong support at 1.1300 that I've been highlighting but has rallied a little once again this morning to post 1.1388 amid some general US$ supply.Bids/support now around 1.1350 then larger at 1.1330 and 1.1300 where the barrier option still provides defence. Sellers poised into 1.1400 again then 1.1420-30 and 1.1450 still.
USDJPY has fallen back again after failing above 113.20 but similarly has on-going demand into 112.70.Immediate sell interest now at 113.20 and 113.50 still with larger between 113.80-00.Immediate bids/demand at 112.70 and 112.50 then 112.30 and 112.00 still. I remain a rally seller in principle and buying back in the dips.
USDCHF edged higher again to post 1.0097 but the sellers once again prevailed up there and we've been back down to 1.0027 this morning,but remains underpinned overall with EURCHF still finding support in the dips. Bids at 1.1380 still holding with more behind at 1.1350, 1.1330 and 1.1300 with sellers still poised at 1.1430 and 1.1450. USDCHF bids now at 1.0020 with larger at 1.0000 and 0.9980 with sellers poised now at 1.0050 then 1.0080-1.0100 again. Happy to trade both sides of the price action at the moment but preferring the dip buys still.
AUDUSD has posted decent gains to break up through both the 0.7120 and 0.7150 resistance areas helped by the general USD selling and monetary stimulus in China. Some bids/support at 0.7150 and 0.7130 then larger at 0.7100 and 0.7080 with sellers poised around 0.7175 and 0.7200. USDCAD rallied to 1.3170 but still can't make further progress and has fallen back to test 1.3100.More bids at 1.30080 and 1.3050 again with sellers poised around 1.3130,then larger at 1.3150 and 1.3180.
Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves.
Have a good day out there one and all.
Twitter: @MSPFX and @MikePatersonFX
Interbank Rate 08.45 GMT